Speaker Mike Johnson has dropped one of the most aggressive options the G.O.P. was considering to cut Medicaid costs to help pay for President Trump’s domestic agenda, bowing to pressure from politically vulnerable Republicans and underscoring the deep party divisions imperiling the plan.
Leaving his office on Tuesday night after meeting with a group of more moderate members, Mr. Johnson told reporters that House Republicans had ruled out lowering the amount the federal government pays states to care for working-age adults who became eligible for the program through the Affordable Care Act’s Medicaid expansion.
Mr. Johnson also suggested he was leaning against another way of reducing spending on Medicaid, by changing the way the federal government pays states — currently by providing a percentage of beneficiaries’ medical bills — to a flat fee per person.
“I think we’re ruling that out as well, but stay tuned,” the speaker said.
The retreat was an acknowledgment that many House Republicans viewed the ideas — both of which would create large state budget shortfalls — as politically toxic. It also underscored how difficult it will be for Mr. Johnson’s conference to find Medicaid cuts that hit the spending targets Republicans set for themselves and also win enough votes to pass.
Ultraconservative Republicans quickly vented their opposition, in a public reminder that Mr. Johnson’s efforts to stave off a revolt of mainstream lawmakers could cost him crucial support from his right flank. That could doom Mr. Trump’s vast tax and spending cut plan in the House, where the speaker can afford to lose fewer than a handful of votes.
“Well – I haven’t ruled it out,” Representative Chip Roy, Republican of Texas, declared on social media after Mr. Johnson’s comments on Tuesday night about abandoning the idea of cutting back on federal payments for some Medicaid beneficiaries. “It’s necessary to stop robbing from the vulnerable to fund the able-bodied.”
House Republicans are laboring to identify roughly $2 trillion in spending cuts to help offset both the 2017 tax cuts they want to extend and the new tax cuts they want to pass in their reconciliation bill. The biggest challenge so far has centered on the Medicaid program, which provides health insurance to 72 million poor and disabled Americans.
The House budget plan calls for $880 billion in cuts from the committee that oversees the program, a target that would be difficult to achieve without substantial changes. If House Republicans cannot agree on policies that comply with the instructions, the entire package could be doomed.
Abruptly reducing federal funding for the program by paying less in the 40 states and the District of Columbia that have expanded Medicaid under Obamacare would have saved an estimated $710 billion over a decade, according to new estimates released by the Congressional Budget Office on Wednesday.
That would have cut funding to state governments, which would have been left with difficult choices. Nine states have passed laws that would cause them to automatically drop coverage for the expansion population if federal funding declines, and three others have provisions that would force an immediate legislative review.
Other states would need to make up the money in some other way — by cutting benefits or payments to medical providers, raising taxes or cutting other state functions. As a result of those changes, the budget office estimated that the policy would cause 5.5 million Americans to lose their Medicaid coverage and 2.4 million Americans to become uninsured.
The Obamacare expansion extended health benefits to poor, childless adults without disabilities, a population that many Republican lawmakers consider less worthy of resources than other populations Medicaid serves, such as poor children, pregnant women and Americans who live in nursing homes. But other Republicans see this population as a core constituency, as working-class voters have become a growing component of the party’s electoral coalition.
Some conservatives like Mr. Roy have argued that uniting around cutting the Affordable Care Act, a program their party detests, should be the bare minimum for Republicans looking to raise revenue for Mr. Trump’s agenda.
“I’ve got a bunch of my colleagues running around saying, ‘Well, we can’t touch Medicaid,’” Mr. Roy said in a speech on the House floor. “Why can’t we? Medicaid was expanded under Obamacare, which we all opposed, and the Medicaid expansion was a big reason why we opposed it.”
But many of Mr. Roy’s colleagues, especially those in politically competitive seats, do not agree. The cuts would be particularly damaging in wealthier Democratic-led states, such as California and New York, where Republicans have been elected in districts where many constituents use Medicaid.
Medicaid pays those states 90 percent of the medical bills for people covered under the expansion, but only half the bill for other beneficiaries, a significant difference.
“I will never support cuts to Medicaid, Medicare or Social Security that are not specifically aimed at reducing waste, fraud or abuse,” said Representative Jeff Van Drew, Republican of New Jersey.
But without any such cuts, Republicans are left with a dwindling set of options that would allow them to meet their $880 billion target. Medicaid reforms with broad support across the caucus, such as requiring beneficiaries to prove they are employed in order to keep their benefits, would not reduce spending by nearly as much.
Another option under consideration, limiting taxes on hospitals and other complex financing maneuvers that states use to increase federal spending on the program, would tend to disadvantage states led by Republicans. The budget office estimated it would reduce the deficit by around $668 billion and cause 3.9 million more people to become uninsured.
Mr. Trump has also recently expressed a reluctance to make any major cuts to Medicaid, and has repeated several times that the program should not be “touched.” A White House official said Mr. Trump was pushing for stronger discounts on prescription drugs used in Medicaid, an alternative that would avoid some of the political pitfalls but may not save enough to comply with the budget language.
